UPDATE: Brookstone Confirms Deal Near With Spencer Spirit Holdings

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Brookstone, Inc. confirmed reports today that it is working toward an agreement for gift, novelty and costume retailer Spencer Spirit Holdings to acquire Brookstone.

Brookstone, in a press release, said it is considering filing a pre-negotiated Chapter 11 bankruptcy with the support of holders of its outstanding bonds to facilitate the sale to Spencer Spirit, which operates the Spencer’s gift/novelty and Spirit seasonal costume chains.

Brookstone reported day-to-day operations will continue uninterrupted during these negotations and beyond.

Brookstone, struggling with weak sales and liquidity under some $140 million in debt, could file for bankruptcy protection as early as this weekend, according to a Wall Street Journal report citing people close to the situation. Spencer Spirit would pay some $120 million for Brookstone, according to the Wall Street Journal report.

Brookstone is reported to have evaluated bids from a number of suitors after missing an interest payment to creditors in January, according to the Wall Street Journal report.

Jim Speltz, Brookstone’s president and CEO, said in a prepared statement from Brookstone, "While we have implemented various successful cost-cutting initiatives, the search for a strong strategic partner who shares our vision and passion was a natural progression. We think we have found that in Spencer Spirit and are excited about the opportunity to begin leveraging the resources of the two companies and popularity of the Spencer, Spirit, and Brookstone brands."

Steven Silverstein, Spencer Spirit's CEO, said, "Brookstone is a well-recognized brand with a long history of selling a unique assortment of innovative consumer products. We see many similarities between the Spencer Spirit and Brookstone business models and are excited to begin sharing knowledge and building a strong future together."